This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
El Paso Electric Company (EPE), an electric utility operating in southern New Mexico, entered into franchise agreements with Doña Ana and Otero counties, allowing it to use county rights-of-way to deliver electricity. These agreements required EPE to pay franchise fees, which it passed on to customers in those counties as separate line-item charges on their bills. The New Mexico Public Regulation Commission (Commission) investigated these charges and ordered EPE to cease collecting them and refund over $5 million to customers (paras 2-4).
Procedural History
- New Mexico Public Regulation Commission, January 26, 2010: The Commission issued a Final Order requiring EPE to stop collecting franchise fee charges from customers and refund amounts collected since 2004, asserting jurisdiction over the fees as part of utility rates (para 4).
Parties' Submissions
- Appellant (El Paso Electric Company): Argued that the Commission lacked jurisdiction over franchise fee charges, as these fees were not utility rates but contractual obligations between EPE and the counties. EPE contended that the fees were distinct from rates and outside the Commission's regulatory authority (paras 5, 12-14).
- Appellee (New Mexico Public Regulation Commission): Asserted that franchise fee charges constituted rates under the Public Utility Act and were therefore subject to its jurisdiction. The Commission argued that these charges were analogous to other rate components it regulates, such as taxes and adjustment clauses (paras 4, 16).
- Intervenors (Doña Ana County and Otero County): Supported EPE's position, emphasizing that franchise fees were local matters governed by agreements between the counties and EPE, not subject to Commission oversight (para 5).
Legal Issues
- Did the New Mexico Public Regulation Commission have jurisdiction over franchise fee charges imposed by EPE under its agreements with Doña Ana and Otero counties?
Disposition
- The Supreme Court of New Mexico vacated and annulled the Commission's Final Order, holding that franchise fee charges were outside the Commission's jurisdiction (para 18).
Reasons
Per Serna J. (Daniels C.J., Maes, Bosson, and Chávez JJ. concurring):
The Court held that the Commission exceeded its jurisdiction by treating franchise fee charges as utility rates. Franchise fees are contractual payments made by EPE to the counties for the use of rights-of-way, and the amounts collected from customers are passed through to the counties without contributing to EPE's revenue or profit. These fees are distinct from rates, which are based on a utility's revenue requirements and regulated by the Commission (paras 12-13).
The Court emphasized that franchise fees are local matters governed by agreements between utilities and local governments, as authorized by statute. The Legislature explicitly required franchise fees to be listed as separate line items on customer bills, indicating an intent to distinguish them from rates. The Court also rejected the Commission's analogy to taxes and adjustment clauses, finding no statutory basis for such comparisons (paras 13-16).
The Court concluded that challenges to franchise fees should be addressed through local political processes or in courts with proper jurisdiction, not through the Commission. As the Commission lacked authority over these charges, its Final Order was vacated (paras 17-18).